Meeting the Challenges: A Historical Record of China’s Development—Speeches by Wen Jiabao at the World Economic Forum Events

Section 1. 2007 Summer Davos Forum

2 0 0 7 S U M M E R D A V O S F O R U M MeetingTheChallengesEN_FA02_17Dec2013.indd 1 MeetingTheChallengesEN_FA02_17Dec2013.indd 1 19/12/13 11:25 AM 19/12/13 11:25 AM “China’s economy has maintained rapid growth for almost thirty years. Will such development momentum continue? My answer is yes.” —Wen Jiabao, 2007 MeetingTheChallengesEN_FA02_17Dec2013.indd 2 MeetingTheChallengesEN_FA02_17Dec2013.indd 2 19/12/13 11:25 AM 19/12/13 11:25 AM 3 BACKGROUND This is the address delivered by Premier Wen Jiabao at the first Annual Meeting of the New Champions, also known as the “Summer Davos,” in Dalian, China. Viewed from a historical perspective, the reform and opening-up during the past thirty years had completely changed the Chinese economy and society. Upon entering a new stage of development in the new century, China has withstood the test of the Asian financial crisis, overcome the SARS epidemic and major natural disasters, confidently responded to the changes brought about by China’s accession to the WTO, successfully implemented the Tenth Five-year Plan, initiated the implementation of the Eleventh Five-year Plan, substantially enhanced the country’s economic strength, achieved major breakthroughs in reform and opening-up, notably by improving the people’s living standards, and markedly increased the country’s productivity, overall strength, and international standing. During this period, China experienced a series MeetingTheChallengesEN_FA02_17Dec2013.indd 3 MeetingTheChallengesEN_FA02_17Dec2013.indd 3 19/12/13 11:25 AM 19/12/13 11:25 AM MEETING THE CHALLENGES 4 of major events that had a profound impact on economic and social development. From the unexpected SARS epidemic in 2003, China gained a deeper understanding of the importance of coordinating economic and social development. Since then, China has paid closer attention to protecting and improving the people’s well-being and developing social programs. A number of strategic steps with milestone importance have been adopted, including the abolition of agricultural taxes for the first time in Chinese history; the provision of free compulsory education; the establishment of a basic framework for a social safety net; and the formulation and implementation of an outline of the national medium- and long-term plan for scientific and technological development. The basic system of a socialist market economy was put in place, the primary role of the market in resource allocation was better leveraged, and greater importance was attached to the use of market mechanisms and a combination of various policy tools to conduct macroeconomic regulation. Faced with the situations, tasks, and features of a new stage of development in the new century, China proposed the key strategic concept of a “Scientific Outlook on Development,” as well as the central strategic goal of building a harmonious socialist society. China was also well aware that it still faced the problems of unstable, imbalanced, uncoordinated, and unsustainable development. Such major problems include an inefficient economic structure, high resource and environmental costs of growth, insufficient coordination of the relationship between investment and consumption, unbalanced development of urban and rural areas and of the various regions, and lagging social programs. After the economy peaked during its latest upward cycle in 2006 and 2007, the problems of excessive investment growth, monetary and credit supply, and the trade surplus compounded one another. ConseMeetingTheChallengesEN_FA02_17Dec2013 .indd 4 MeetingTheChallengesEN_FA02_17Dec2013.indd 4 19/12/13 11:25 AM 19/12/13 11:25 AM 2007 SUMMER DAVOS FORUM 5 quently, excessive growth and structural inflation became the most serious problems affecting the Chinese economy. In response to these two problems, the Chinese government strengthened and improved macroeconomic regulation by shifting its proactive fiscal policy and prudent monetary policy towards a prudent fiscal policy and a tightened monetary policy following a step-by-step process. The government also strengthened the regulation and control of land and of the monetary and credit supply, and further leveraged fiscal and taxation policies to make economic adjustments. These efforts have prevented major swings in the economy. China’s remarkable achievements in development have gained worldwide attention. Whether China can continue its chosen path of development and maintain its momentum of development, and the question of where a rapidly-growing China is headed generated strong interest from the international community. It is for this reason that the World Economic Forum (WEF) chose to hold its annual meeting in China based on the...